Society For Human Resource Management (SHRM) Certified Professional Practice Exam

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Study for the SHRM Certified Professional Exam with flashcards and multiple choice questions. Each question includes hints and explanations to help you understand key HR concepts. Prepare for your certification with confidence!

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What defines a person-based system?

Pay based on performance
Pay from seniority
Pay for how well a person can work based on competency
Pay through a salary structure

The correct answer is: Pay for how well a person can work based on competency

A person-based system is characterized by compensation practices that emphasize individual employee competencies, skills, and abilities rather than the tasks or job responsibilities alone. In this system, pay is determined based on how well a person can perform their job tasks and their overall capacity for growth and contribution within the organization. This method recognizes the value of developing talented individuals and often ties compensation to their specific qualifications or competencies, encouraging ongoing professional development and skill enhancement. This approach differentiates itself from other compensation systems, such as those based on performance, seniority, or structured salary systems, which may not take individual competencies into account as a primary determinant for pay. By focusing on the unique capabilities of employees, a person-based system aims to align compensation with the actual value and contributions each employee brings to the organization.